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Blog Posts

2015 Tax Update

As we head into the homestretch of 2014, now is a good time to provide an update for the tax-related changes you can expect for 2015.  Some of these will be purely informational; some of them should spur you to take action so you are prepared when the year begins. Social Security Social Security benefits will increase by 1.7% beginning in January to account for cost-of-living increases. For those individuals receiving Social Security benefits prior to Full Retirement Age (FRA) for Social Security, the earnings limit for 2015 is $15,720. For every $2 in earnings above the limit, $1 in SS benefits will be withheld. For employees, Social Security and Medicare tax withholding are as follows: Social Security taxes will be withheld at a rate of 6.2% for employees up to a wage base of $118,500, or a maximum of $7,347 for 2015. Medicare taxes are withheld at a rate of 1.45% for employees for all wages, with no maximum wage base. The Medicare surtax will be withheld by employers for those employees whose wages exceed $200,000, at an additional Read on! →

2015: New Rule for After-Tax Contributions to Your Qualified Retirement Plan

Will a tax incentive motivate you to save more? The reality for most is a resounding, YES. If this sounds like you, you may be interested to learn about a new rule regarding after-tax contributions that may affect your 401(k) Plan in 2015. A recent ruling by the IRS may give many small business owners and high wage earners incentive to contribute more to 401(k) plans.  Beginning in 2015, eligible employees will be allowed to shift after-tax 401(k) contributions directly to a Roth IRA upon separation from service.  For individuals who can easily exceed 401(k) pretax contribution limits or income limits for Roth IRA contributions, this means there is a new option for additional retirement savings and the potential for substantial tax savings during retirement. The Roth IRA Advantage In 2015, couples earning $193,000 or more and individuals earning $131,000 or more are not eligible to directly contribute to a Roth IRA.  For couples and individuals whose earnings are under these thresholds, contributions up to $5,500 (plus $1,000 “catch up” if 50 or older) per year are allowed. The advantages Read on! →

Job change? Your guide to a financially smooth job transition

In the past, employees traditionally worked for one company for the majority of their career.  However, this is becoming increasingly uncommon for today’s workers.  Employees are typically feeling unappreciated and overworked, and as a result a number of individuals are seeking a job change more often than we have seen in the past. With intra-career job transition becoming more the “norm” in today’s society, it’s important for you, as the employee, to understand the impact such a transition will have on your financial situation, the level of control you will have with certain benefits, the benefits you might be forced to leave behind and the critical decisions you’ll need to make along the way. Regardless of why you are transitioning into a new role, if you find yourself in this position make sure you consider the following to ensure a smooth transition. Considerations for your current/previous employer benefits Changing jobs presents you with an opportunity to consolidate and take control of your retirement benefits. While each company specific plan will have its own rules, there are a number of questions to consider when Read on! →

Why Emotional Decisions May Be Ruining Your Investment Return

Choppy markets can lead to emotional decisions. How do you keep your actions in check when emotions are running high? A recent J.P. Morgan Market Insight shared the following observation, “While institutional investors typically follow policy targets, which naturally enforce disciplined investing, retail investors face behavioral biases that often stand in the way of optimal decision making.  Overcoming behavioral biases requires discipline and guidance, but it may help investors generate more attractive returns in the long-run.” In looking at the first chart below from J.P. Morgan, you will notice that retail investors (the “do-it-yourselfers”), on the whole, are acting in complete opposition to institutional investors in the markets.  The result of these opposite actions over time is that long term returns earned by the average investor are well below what actually occurred in the markets, as can be seen by the second chart below.         These vast differences in actual returns can be at least partially explained by the way investing decisions are made in institutional environments vs. retail investors.  Rather than following regimented guidelines, individual investors subconsciously allow behavioral biases Read on! →

Open Enrollment – Are You Prepared?

September 23rd marked the first official day of Autumn. Open enrollment for many individuals typically accompanies the welcomed arrival of the fall season. Also known as “annual enrollment”, open enrollment is a period of time when individuals may make additions, changes or deletions to their elected employee benefits, individual health insurance, or Medicare coverage. Whether you are working and need to update your benefits package at work, are retired and eligible for Medicare benefits, or are under age 65 and not covered by a group health insurance policy, you should consider your options before the designated open enrollment period begins. Employee Benefits Know when open enrollment begins and ends for your company. Typically, open enrollment for employee benefits begins in the fall of each year, but the timing will vary slightly from company to company. The specific time period and details for your employer’s plan(s) will be communicated by your HR department, so remember to open and read all communications you receive regarding your group plans. We’ve seen a number of companies institute changes to spousal benefits and health insurance plans Read on! →